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Tuesday, March 29, 2011

NPR is running this story from the Associated Press and this report -- noting the different reactions from the Court's male and female Justices -- from analyst Nina Totenberg. Totenberg, like others, fails to note Justice Breyer's evident support for the case.

Lyle Deniston of SCOTUSblog writes, "Argument recap: A fatal flaw detected?" Deniston notes that several of the justices were bothered by what Justice Kennedy called an inconsistency: the plaintiffs' allegation that "Wal-Mart has a policy of maintaining a common “culture” (the “Wal-Mart Way”) that ensures uniformity throughout its thousands of stores, yet company headquarters gives its local store managers unlimited discretion to decide workers’ pay and promotions, and the two together result company-wide in lower pay and fewer promotions for female employees." Deniston also correctly notes that plaintiffs' counsel Joseph Sellers faced "tough questioning from Justices Ruth Bader Ginsburg, Elena Kagan and Sonia Sotomayor, Ginsburg was a bit worried about how, if the class action did proceed, a federal judge could handle the issue of sorting out who among them received an award of back pay, and Kagan and Sotomayor appeared troubled about how the judge would handle individual hearings into the job harms allegedly done to specific women employees."

James Oliphant, writing for the L.A. Times, agreed: "But although the more conservative-leaning justices on the high court seemed the most hostile to the case, nearly all its members appeared troubled by aspects of the litigation, with concerns including how back pay would be awarded to plaintiffs and whether the company would be afforded ample opportunity to present evidence of non-discrimination at trial."

I have to disagree with his assessment that the three female justices, Bader Ginsburg, Sotomayor, and Kagan, appeared "most sympathetic" to the case. That position clearly belongs to Justice Breyer, who seemed to have no qualms with the plaintiffs' case.

Oliphant concludes that concerns about back pay in a Rule 23(b)(2) case, among others, "left open the possibility that, rather than a divided court issuing an opinion in a highly charged case involving sex discrimination, the justices could decide to remand the case to the lower court under a revised set of guidelines."

The Wall Street Journal reports that the case "appeared unlikely to survive after Tuesday's Supreme Court arguments, where justices suggested the lawsuit was unfair both to the retail giant and hundreds of thousands of women who allegedly were victimized." The story continues:

Here are some interesting points from the transcript of oral argument. It seems to have been a very lively argument, with most of the justices jumping in right from the start. It makes me wish that the Court would broadcast at least audio of the arguments, if not video.

﻿ARGUMENT OF THEODORE BOUTROS, REPRESENTING WAL-MART:

JUSTICE ROBERTS: [S]o, they've got thousands of stores, and, you know, every week they get a report from another store saying that, you know, there's an allegation of gender discrimination. At some point, can't they conclude that it is their policy of decentralizing decisionmaking that is causing or permitting that discrimination to take place?

***

JUSTICE GINSBURG: Did -

JUSTICE KENNEDY: The Chief Justice's question reminds me somewhat of our rule in Monell under 1983: A city is not liable for a -- a constitutional violation unless it has a policy. Would you think that we could use that as an analogue to determine whether or not there is a common question here?

***

JUSTICE GINSBURG: Is there any responsibility if you -- the numbers are what has been left out so far. The company gets reports month after month showing that women are disproportionately passed over for promotion, and there is a pay gap between men and women doing the same job. It happens not once, but twice. Isn't there some responsibility on the company to say, is gender discrimination at work, and if it is, isn't there an obligation to stop it?

MR. BOUTROUS: Your Honor, yes, there is an obligation to ensure -- for a company to do its best to ensure there are not wage gaps and discrimination. But here, for example, if one looks at the aggregated statistics that the plaintiffs have pointed to, it points to a completely different issue. It does not show that there were gender gaps at the stores among comparable people. That's really the fundamental flaw in their case.

Their argument is that individual decisionmakers throughout the country were making stereotyped decisions and that that had a common effect, but they just added everything together. They haven't shown a pattern across the map. They've added all the data together and pointed to disparities, some of which mirror some of the -- the statistics that --

JUSTICE SOTOMAYOR: Counsel, I thought their expert didn't aggregate them together. He did it regionally, not store by store, as your expert did, number one; and, number two, that he performed, as accepted by the district court, and affirmed by the circuit court, any number of controlled variable comparisons, including job history, job ratings, and other things, and found that the disparity could not be explained on any of the normal variables that one would expect and that the disparity was significantly much higher than the competitors of Wal-Mart and what they were paying their labor force. So, what is speculative about that, number one? And, two, why is that kind of statistical analysis inadequate to show that a policy of some sort exists?

MR. BOUTROUS: Justice Sotomayor, first, plaintiffs' expert did a national regression and the simply estimated the regional results. He did not do a regional regression. But even if he had, these statistics go more to the merits. We think we have strong arguments on the merits responding to those statistical arguments --

JUSTICE SOTOMAYOR: Well, that begs the legal question, which is -- you're right. Ultimately, you may win and prove to a factfinder that this analysis is fatally flawed, but what the district court concluded was that on the basis of your expert, whom he discounted because your expert was -- was basing analysis on -- on premises that the court found not acceptable, that there was enough here after a rigorous analysis. What's the standard that the court should use in upsetting that factual conclusion?

MR. BOUTROUS: Your Honor, the district judge did not discount Wal-Mart's expert. The district court found that it wasn't the stage at which to make a determination between the two. The standard that we think would govern would be the standard that the Second Circuit adopted in the IPO case, which says there needs to be a choice.

JUSTICE ALITO: What do you think is the difference between the standard that the district court was required to apply at the certification stage on the question whether there was a company-wide policy and the -- the standard that would be applied on the merits?

MR. BOUTROUS: At the certification stage, Justice Alito, the plaintiffs did not have to prove that there was an actual policy of discrimination and that that was the company's policy, but they at least needed to point to a policy that was common and that linked all of these disparate individuals and disparate locations and different people together. And -- and one -- their argument is that the common policy is giving tens of thousands of individuals discretion to do whatever they want. That is not commonality. It's the opposite.

JUSTICE KAGAN: I don't think that's quite fair, Mr. Boutrous. I think their argument was that the common policy was one of complete subjectivity, was one of using factors that allowed gender discrimination to come into all employment decisions. And in Watson, we suggested that that was a policy, a policy of using subjective factors only, when making employment decisions. That's exactly the policy that was alleged here.

***

JUSTICE GINSBURG: Mr. Boutrous, there was a case, it was in the '70s, and it was a class action against AT&T for, I think, promotion into middle management. What was at issue there was a part -- a test, part objective, but then in the end, the final step was a so-called total person test, and women disproportionately flunked at that total person. And the idea wasn't at all complicated. It was that most people prefer themselves; and so, a decisionmaker, all other things being equal, would prefer someone that looked like him. And that was found, that total -- the application of that total person concept was found to be a violation of Title VII.

This sounds quite similar. I mean, it's not just -- it's not subjective. You have an expert -- I know you have some questions about that expert -- but the expert saying that gender bias can creep into a system like that simply because of the natural phenomenon that people tend to feel comfortable with people like themselves.

***

JUSTICE KAGAN: Mr. Boutrous, I think that that suggests that the plaintiffs would have to demonstrate discrimination in every individual case, and that's never been the law. All that the plaintiffs have to demonstrate and, especially at this stage in the proceedings, is that there is a practice, a policy of subjectivity that on the whole results in discrimination against women, not that each one of these women in the class were themselves discriminated against.

***

JUSTICE SOTOMAYOR: So, would you address the -- address them separately for me, and tell me why a (b)(2) class couldn't exist only on injunctive relief? And if it can, if you're conceding it can, then is your attack merely that the monetary component of this, the back pay -- which, you know, I know the dispute on whether that's equitable relief or compensatory relief or not -- why that just can't be separated out and put into the (b)(3) claim?

***

ARGUMENT OF JOSEPH SELLERS, REPRESENTING DUKES:

JUSTICE KENNEDY: It's not clear to me: What is the unlawful policy that Wal-Mart has adopted, under your theory of the case?

MR. SELLERS: Justice Kennedy, our theory is that Wal-Mart provided to its managers unchecked discretion in the way that this Court's Watson decision addressed that was used to pay women less than men who were doing the same work...

JUSTICE KENNEDY: It's -- it's hard for me to see that the -- your complaint faces in two directions. Number one, you said this is a culture where Arkansas knows, the headquarters knows, everything that's going on. Then in the next breath, you say, well, now these supervisors have too much discretion. It seems to me there's an inconsistency there, and I'm just not sure what the unlawful policy is.

***

JUSTICE SCALIA: I don't -- I'm getting whipsawed here. On the one hand, you say the problem is that they were utterly subjective, and on the other hand you say there is a -- a strong corporate culture that guides all of this. Well, which is it? It's either the individual supervisors are left on their own, or else there is a strong corporate culture that tells them what to do.

MR. SELLERS: Well, Justice Scalia, there is this broad discretion given the managers.

JUSTICE SCALIA: Right.

MR. SELLERS: But they do not make these decisions in a vacuum. They make the decisions within a company where they are heavily --

JUSTICE SCALIA: So, there's no discretion; is that what you're saying?

MR. SELLERS: No, I'm not. I'm suggesting they are given this discretion, but they are informed by the company about how to exercise that discretion. So, it's effectively saying --

JUSTICE SCALIA: If somebody tells you how to exercise discretion, you don't have discretion.

***

JUSTICE SCALIA: Have you sufficiently shown -- despite the fact of an explicit written central policy of no discrimination against women, do you think you've adequately shown that that policy is a fraud, and that what's really going on is that there is a central -- a central policy that promotes discrimination against women? Do you really think --

MR. SELLERS: We -- we have testimony in the record from the vice president of the company that that policy was lip service at the company. We have testimony from -- from the expert in this case --

JUSTICE GINSBURG: Isn't this something that would be -- I mean, this -- we're not just talking about getting your foot in the door. We're talking about certifying the class, and you may well lose on every one of these points, but -- but the 23(a) standards, they're not supposed to be very difficult to overcome. It's just a common question of fact --

***

JUSTICE GINSBURG: But what seems to me is a very serious problem in this case is: How do you work out the back pay? You say -- we get through the 23(a) threshold. We got class certified under 23(b)(2). And the judge says, there's no way I could possibly try each of these individuals. So, we're going to do it how? How are they going to calculate the back pay?

***

JUSTICE BREYER: Is the -- is the common question of law or fact whether, given the training which central management knew --

MR. SELLERS: Right.

JUSTICE BREYER: -- given the facts about what people say and how they behave, many of which central management knew, and given the results which central management knew or should have known, should central management under the law have withdrawn some of the subjective discretion in order to stop these results?

MR. SELLERS: That -- that is a fair way to put it.

JUSTICE BREYER: If that is a fair way to put it, is that a question that every one of the women in this class shares in common?

MR. SELLERS: I -- I believe so, Justice Breyer, because they've all been the subject in every one of these stores to this very broad discretion.

JUSTICE GINSBURG: The district judge didn't think so. Didn't the district judge say that in awarding back pay some would get a windfall and others would be uncompensated?

***

JUSTICE SCALIA: Can I just say something here? Doesn't your class include both those women who were underpaid and both -- and those women who weren't underpaid? ... Doesn't your class include both? ... Is that commonality?

MR. SELLERS: As every class does, Justice Scalia. Every class has some portion of its members who are not harmed by the discrimination. As the Teamsters case recognized, what is common about them is they were all subject to the same highly discretionary decisionmaking, even if some of them weren't harmed by it. That still presents a question common to the class.

JUSTICE KENNEDY: Well, correct me if I'm wrong, I thought the Teamsters case was an action by the government that wasn't a class action case.

MR. SELLERS: That -- that is correct, but it -- it -- it is the paradigm we use for determining what you need to establish a pattern or practice of discrimination.

JUSTICE KENNEDY: Pattern or practice, that's correct.

***

JUSTICE SOTOMAYOR: Counsel, I'm -- I'm a little confused, all right?

MR. SELLERS: Okay.

JUSTICE SOTOMAYOR: Because you're saying an individualized hearing is impossible, but that's exactly what you're saying you're going to do, only through statistics.

MR. SELLERS: That's --

JUSTICE SOTOMAYOR: You're going to say through my statistical model, I will be able to identify those women in the class who are deserving of pay raises. What that doesn't answer is when in this process is the defendant going to be given an opportunity to defend against that finding?

MR. SELLERS: Right.

JUSTICE SOTOMAYOR: Because you're -- are you suggesting that the district court would appropriately bar a defendant where there's no proof of intentionality with respect to not keeping records, that it was intended to stop these women from collecting money, et cetera? When are they going to get a chance?

MR. SELLERS: Well --

JUSTICE SOTOMAYOR: And if they're going to get a chance, isn't that an individualized hearing?

MR. SELLERS: Yes. Effectively Wal-Mart will have ample opportunity through the arguments over which variables which to use....

JUSTICE SOTOMAYOR: No, no, no. That sounds like you're saying their only opportunity will be on the model.... They will be precluded from attempting to show any particular evidence that a particular decision was not made?

***

MR. SELLERS: I -- I'm -- let me answer you directly. I'm not saying that. Wal-Mart has an opportunity to make the case that with whatever showing it wishes to make it can reconstruct these decisions more reliably, and in an entirely subjective environment, and if it does, it can offer evidence in certain circumstances; but it hasn't done so; and I don't submit it's going to be able to do so here.

JUSTICE SCALIA: This -- this takes evidence, to establish that -- that it's more reliable to have a hearing with evidence on the particular promotion or dismissal of the individual, that that is more reliable than using -- I don't care how admirable a statistical guess you make; I mean is that really a question?

***

JUSTICE SCALIA: We should use that in jury trials, too, for really old cases. We should just put a statistical model before the jury and say, you know, this stuff is too old; so, we'll -- ... -- we'll do it on the basis of -- is this really due process?

MR. SELLERS: I -- Justice Scalia, I submit it is; and the circuits that have been considering this for 40 years have so held. In the narrow set of circumstances that we have here, where there are standardless, recordless decisions at issue.

JUSTICE KENNEDY: Well, if it's standardless and -- and recordless, then why is there commonality? It seems to me that what you -- your answer that you just gave really is a -- shows a flaw in your case on commonality.

***

REBUTTAL ARGUMENT OF MR. BOUTROS FOR WAL-MART:

JUSTICE BREYER: If you just spend one second, remember my question. We've got a common issue. Why isn't that enough at least to support a (b)(2) injunctive action?

MR. BOUTROUS: Your Honor, the -- the scenario you outline -- there's no dispute about the policies that existed at the time, that there were --

JUSTICE BREYER: That sounds like the merits you're getting to. His point, remember, is this is just certification. So, my question is: Assuming they can support it with evidence, why can't they have their 12 (b)(2) class, at least on an injunctive relief?

The Supreme Court has just finished hearing oral argument in Wal-Mart v. Dukes, the national gender discrimination class action.

According to the Associated Press, "The justices suggested that they are troubled by lower court decisions allowing the class-action lawsuit to proceed against the world's largest retailer. Justice Anthony Kennedy, often a key vote on the high court, said he is unsure 'what the unlawful policy is' that Wal-Mart engaged in to deprive women of pay increases and promotions comparable to men."

Given Kennedy's swing role on the Court, this obviously is a bad sign for the plaintiffs.

I will post more news as it becomes available.

More from the AP:

Joseph Sellers, the lawyer for the women, said that lower courts were persuaded by statistical and other evidence put forth so far in the 10-year-old lawsuit.

Sellers said a strong corporate culture at Wal-Mart's Bentonville, Ark., headquarters that stereotyped women as less aggressive than men translated into individual pay and promotions decisions at the more than 3,400 Wal-Mart and Sam's Clubs stores across the country.

"The decisions are informed by the values the company provides," Sellers said.

Justice Antonin Scalia said he felt "whipsawed" by Sellers' description. "Well, which is it?" Scalia asked. Either individual managers are on their own, "or else a strong corporate culture tells them what to do," he said.

***

Justice Ruth Bader Ginsburg said that at this stage of the lawsuit, the issue is not proving discrimination, but showing enough evidence to go forward. "We're talking about getting a foot in the door," Ginsburg said, a standard she called not hard to meet.

The 78-year-old justice, who made her name by bringing discrimination claims, said it was possible that Wal-Mart could refute the claims at a trial.

But several of her colleagues appeared to agree with Boutrous that even subjecting Wal-Mart to a trial would be unfair.

The transcript is now available here. I will post more once I can review it.

Wednesday, March 23, 2011

The Supreme Court of the United States will hear oral argument in Wal-Mart Stores, Inc. v. Dukes on March 29, 2011, at 10:00 a.m. EST. I have not had time to dissect the merits briefs, but they are available on the Impact Fund's web site (and from other sources):

The merits briefs and al of the amicus briefs are available here. The Impact Fund has additional info on the case here. After the oral argument, the Court will post the transcript here, and we'll provide a synopsis. SCOTUSblog has comprehensive coverage. Nabiha Syed details media coverage, and Amanda Frost writes about academic debate inspired by the case. Lyle Deniston gives a good preview of the argument.

The District Court in one action found that defendant Saint-Gobain violated the FLSA by placing timeclocks in a location that prevented workers from receiving credit for the time they spent donning and doffing work-related protective gear.

Plaintiff Kevin Kasten then brought an FLSA anti-retaliation suit against Saint-Gobain, alleging that Saint-Gobain discharged him because he orally complained to company officials about the timeclocks. The District Court granted Saint-Gobain summary judgment, concluding that the Act's antiretaliation provision did not cover oral complaints. The Seventh Circuit affirmed.

The Supreme Court reversed, holding that Congress intended the antiretaliation provision to cover oral, as well as written, complaints.

The sole question presented is whether “an oral complaint of a violation of the Fair Labor Standards Act” is “protected conduct under the [Act's] anti-retaliation provision.” The Act protects employees who have “filed any complaint,” 29 U.S.C. § 215(a)(3), and interpretation of this phrase “depends upon reading the whole statutory text, considering the purpose and context of the statute, and consulting any precedents or authorities that inform the analysis.” This analysis leads us to conclude that the language of the provision, considered in isolation, may be open to competing interpretations. But considering the provision in conjunction with the purpose and context leads us to conclude that only one interpretation is permissible.

Slip op. at 4.

Several functional considerations indicate that Congress intended the antiretaliation provision to cover oral, as well as written, “complaint[s].” First, an interpretation that limited the provision's coverage to written complaints would undermine the Act's basic objectives. The Act seeks to prohibit “labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers.” 29 U.S.C. § 202(a). It does so in part by setting forth substantive wage, hour, and overtime standards. It relies for enforcement of these standards, not upon “continuing detailed federal supervision or inspection of payrolls,” but upon “information and complaints received from employees seeking to vindicate rights claimed to have been denied.” And its antiretaliation provision makes this enforcement scheme effective by preventing “fear of economic retaliation” from inducing workers “quietly to accept substandard conditions.”

Slip op. at 7.

The Secretary of Labor has consistently held the view that the words “filed any complaint” cover oral, as well as written, complaints. The Department of Labor articulated that view in an enforcement action filed many years ago... It has subsequently reaffirmed that view in briefs. And more recently it has acted in accordance with that view by creating a hotline to receive oral complaints...

Slip op. at 9.

Justice Breyer wrote the majority opinion. Justice Scalia dissented, with Justice Thomas joining. Justice Kagan did not take part. The opinion is available here.

Wednesday, March 16, 2011

I like to keep track of decisions dealing with the waiver of one's right to compel arbitration. See posts here and here.

This one came out a while ago, but I've never published my post on it. In Augusta v. Keehn & Associates (3/4/11) 193 Cal.App.4th 331, the Court of Appeal affirmed the holding of the trial court (San Diego Superior Court, Judge Jay M. Bloom) that the plaintiff waived his right to arbitrate a legal malpractice claim where he knew of the arbitration clause when he filed his civil complaint but did not petition to compel arbitration for six and a half months and plaintiff undertook formal discovery in the civil action. The Court held that substantial evidence supported the trial court's finding that defendant’s supplemental discovery responses were sufficiently prejudicial to warrant the denial of arbitration since these answers revealed new information, and plaintiff had refused to reciprocate in discovery.

Wednesday, March 9, 2011

The California Supreme Court will hear oral argument in Sullivan v. Oracle on April 6, 2011, at 9:00 a.m., in Los Angeles. Sullivan raises the following questions:

First, does the California Labor Code apply to overtime work performed in California for a California-based employer by out-of-state plaintiffs in the circumstances of this case, such that overtime pay is required for work in excess of eight hours per day or in excess of forty hours per week?

Second, does § 17200 apply to the overtime work described in question one?

Third, does § 17200 apply to overtime work performed outside California for a California-based employer by out-of-state plaintiffs in the circumstances of this case if the employer failed to comply with the overtime provisions of the FLSA?

We will provide more information as soon as we can after the oral argument.

Wednesday, March 2, 2011

Seymore v. Stetson Marine, Inc. (2/28/11) --- Cal.App.4th ----, 2011 WL 680344, is an unusual case involving 24-hour shifts, on call time, and sleep time. The defendant, Metson, "provides 'crew members and vessel operations for offshore oil spill recovery vessels.' Metson's vessels must be prepared to respond to emergency oil spills 24 hours a day. Plaintiffs were employed as crew members on Metson's ships...." Plaintiffs worked 14-day “hitches” on Metson's ships, alternating with 14 days off. Each shift started on a Tuesday at noon, and ended 14 days later. Metson paid plaintiffs for 12 hours per day -- 8 hours at straight time, and 4 hours at time and a half -- whether they worked 12 hours or not. The remaining hours were designated "stand by" time: 8 hours for sleep; three hours for meals; and 1 hour for recreation. Plaintiffs could leave the ship, but had to carry a pager and be able to return within 30 to 45 minutes.

First, the Court held that Metson "attempted to evade" the overtime laws in the way that it calculated Plaintiffs' workweek:

Although it is undisputed that Metson's employees, including plaintiffs, worked a regular 14-day schedule beginning at noon on Tuesdays and ending at noon two Tuesdays later, Metson calculated overtime pay on the premise that the workweek began at 12:00 a.m. on Monday and ended at 11:59 p.m. the following Sunday. Under Metson's calculations, plaintiffs worked six days in the first workweek, seven days in the second workweek and two days in a third workweek. On that basis, plaintiffs were paid a single seventh day premium at the end of the second workweek.

Slip op. at 3, citingIn re Wal-Mart Stores, Inc. Wage and Hour Litigation (N.D.Cal.2007) 505 F.Supp.2d 609, 617-618. Addressing the argument that an employer may designate its own workweek, the Court held: "Metson may designate any workweek it wishes, but the workweek it selects and requires its employees to observe is the workweek it must use for the purpose of calculating employee compensation." Slip op. at 4.

The Court next agreed with the plaintiffs that they were entitled to overtime pay for the 12 hours they were on "stand by" each day because the restrictions Metson imposed during that time period subjected them to Metson's continued control. After reviewing the rule that employers must pay for all time during which their employees are within their control (Morillion v. Royal Packing Co.), the Court held:

It is undisputed that Metson allocated eight hours of the twelve hours of off-duty, standby time for sleeping and required plaintiffs to sleep aboard ship during their 14 day hitches. With respect to the remaining four hours of the twelve off-duty standby hours, plaintiffs were subject to a response time requirement that effectively placed a geographic restriction on their activities during that period. “As a practical matter, if an employee is not required to remain on the employer's premises, geographical restrictions are imposed according to the required response time for an employee to return to the employer's premises. [Citations.] In such cases, the employee while on-call may only travel that distance from the employer's premises which can be traveled safely within the required response time.” [Citations.] The undisputed evidence here establishes that if plaintiffs left their ship during their standby time, they needed to be able to return to the ship within at most 45 minutes.

Considering only the four hours not designated as a period for sleep ... plaintiffs were free to pursue whatever activities they chose, so long as they did not consume alcohol and could safely return to the ship within the prescribed time. The required response time (and perhaps the alcohol ban) precluded plaintiffs from going places and pursuing activities in which they might otherwise have engaged. [Citations.] Nonetheless, plaintiffs were free to pursue recreational activities of their choice aboard ship, such as reading, watching television or using the internet, and they could and did leave the ship to exercise and run personal errands. Moreover, the undisputed evidence is that emergencies were rare and that plaintiffs were seldom called back to the ship during their off-duty standby hours.

***

Except with respect to certain occupations in which the employee resides on the premises, covered by a different wage order, California courts have consistently held that an employee required to sleep at the work site is subject to the employer's control during sleeping hours. [Citations.]

***

Thus, assuming that the restrictions imposed by Metson on its employees, including the on-board sleeping requirement, are in fact reasonable in light of the nature of the services Metson provides, hours during which the employees remain under the substantial control of Metson nonetheless constitute hours worked. Such control unquestionably exists during hours that employees are required to sleep aboard ship.

***

Thus, the degree of control exercised by requiring the employees to sleep aboard ship, which is not their residence, renders the eight sleep time hours “hours worked” under California law. The fact that plaintiffs were required to spend their sleeping hours aboard ship also bears on the appropriate characterization of the additional four hours per day of standby time. While the balance of factors specified in Gomez might otherwise lead to the conclusion that those four hours are not under the employer's control, the fact that the employees must under all circumstances return to the ship to sleep tips the balance in the other direction. The on-board sleep requirement significantly affects and limits what the employee can and cannot do during the four non-sleeping hours. [Citations.] Viewing the entire 12-hour off-duty standby period as a whole, the restrictions placed on plaintiffs' whereabouts significantly restricted their ability to pursue activities of their choice. [Citations.]

Slip op. at 6-10. The Court thus concluded that all 24 hours of each day was "hours worked." However, the Court held that this did not equate to compensable time.

As noted above, Metson allocated eight hours of unpaid time a day for sleep. The undisputed facts establish that sleeping facilities were provided for employees on the ships, and that it was exceptionally rare for their sleep to be interrupted by an emergency. The undisputed facts also establish an implied agreement between the parties that plaintiffs would not be compensated for eight hours of sleep time so long as their sleep was not interrupted. Prior to their employment, plaintiffs received a handbook that set forth Metson's compensation policies, including that employees would not be compensated for eight hours of “off-duty” sleep time each day. Plaintiffs did not dispute that they were “aware of and worked for [Metson] pursuant to the pay structure set forth in [Metson's] employee handbook.”

Thus, while plaintiffs were entitled to be compensated for only four, rather than 12, hours of standby time during each 24-hour working day, the summary judgment in favor of Metson must be reversed also because plaintiffs are entitled to be compensated for those four-hour periods.

We conclude the preservation of individual claims is an essential prerequisite to application of the death knell doctrine: the doctrine renders appealable only those orders that effectively terminate class claims but permit individual claims to continue. When instead an order terminates both class and individual claims, there is no need to apply any special exception to the usual one final judgment rule to ensure appellate review of class claims. Instead, routine application of that rule suffices to ensure review while also avoiding a multiplicity of appeals. Because the Court of Appeal misapplied these principles in dismissing an appeal from the sustaining of a demurrer to class claims here, we reverse.

Slip op. at 1. The Court explained, and I'll quote it at some length because I find it interesting:

Two procedural circumstances were critical to our decision in Daar: first, that the appealed-from order was the practical equivalent of a final judgment for some parties, and second, that in the absence of our treating the order as a de facto final judgment, any appeal likely would be foreclosed. On the first point, the order “virtually demolished the action as a class action” and was in “ ‘legal effect’ ... tantamount to a dismissal of the action as to all members of the class other than plaintiff”. In cases decided since Daar, we and the Courts of Appeal have emphasized that orders that only limit the scope of a class or the number of claims available to it are not similarly tantamount to dismissal and do not qualify for immediate appeal under the death knell doctrine; only an order that entirely terminates class claims is appealable.

Equally important in Daar was the circumstance that the order appealed from was essentially a dismissal of everyone “ other than plaintiff.” We emphasized that permitting an appeal was necessary because “[i]f the propriety of [a disposition terminating class claims] could not now be reviewed, it can never be reviewed”, and we were understandably reluctant to recognize a category of orders effectively immunized by circumstance from appellate review. This risk of immunity from review arose precisely, and only, because the individual claims lived while the class claims died. As the United States Supreme Court has explained, “[t]he ‘death knell’ doctrine assumes that without the incentive of a possible group recovery the individual plaintiff may find it economically imprudent to pursue his lawsuit to a final judgment and then seek appellate review of an adverse class determination.” This concern-that an individual plaintiff may lack incentive to pursue his individual claims to judgment, thereby foreclosing any possible appellate review of class issues-is present in cases such as Daar, where individual claims persist but remain unresolved, but is wholly absent in cases where a final judgment resolving all claims will follow as a matter of course without further action by the individual plaintiff. Consistent with this understanding, decisions in other jurisdictions specially permitting appeal of orders terminating class claims routinely rely on the assumption that appeal is warranted because review otherwise would be foreclosed by the persistence of individual claims.

Thus understood as requiring an order that (1) amounts to a de facto final judgment for absent plaintiffs, under circumstances where (2) the persistence of viable but perhaps deminimis individual plaintiff claims creates a risk no formal final judgment will ever be entered, the death knell doctrine fits comfortably within the existing statutory framework. In Daar itself, we described the class certification denial order as “in legal effect a final judgment” settling the respective rights of the absent class members vis-à-vis the defendant, and thus within the settled rule that orders amounting to de facto judgments as to some but not all parties could be treated as final judgments and appealed under former section 963.

Slip op. at 3-4.

Justice Werdegar wrote for a unanimous Court. The opinion is available here.